In the graph, the economy moves from B to a point with 45 tonnes of wheat on the PPC. Which statement is correct? A PPC for wheat (tonnes) and cloth (lakh metres), bowed out from the origin, from 45 lakh m of cloth with no wheat to 50 tonnes of wheat with no cloth. Point A (20 wheat, 15 cloth) lies inside the curve, point B (40 wheat, 27 cloth) lies on it, and point C (45 wheat, 40 cloth) lies outside it.

In the graph, the economy moves from B to…

In the graph, the economy moves from B to a point with 45 tonnes of wheat on the PPC.

Question 51

HardOriginal question

In the graph, the economy moves from B to a point with 45 tonnes of wheat on the PPC. Which statement is correct?

A PPC for wheat (tonnes) and cloth (lakh metres), bowed out from the origin, from 45 lakh m of cloth with no wheat to 50 tonnes of wheat with no cloth. Point A (20 wheat, 15 cloth) lies inside the curve, point B (40 wheat, 27 cloth) lies on it, and point C (45 wheat, 40 cloth) lies outside it.

Cloth output must fall below 27 lakh mCorrect answerYour answerCloth output can stay at 27 lakh mCorrect answerYour answerCloth output must riseCorrect answerYour answerThe economy reaches point CCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

B (40, 27) is on the PPC, so resources are fully used there.
More wheat along the curve is possible only by giving up some cloth.

Worth noting

C has 45 tonnes of wheat too, but with 40 lakh m of cloth it lies outside the curve.

Concept: Trade-off on the PPC
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsThe production possibility curve

Practise this chapter →

Ten questions from Central Problems & the PPC, at your own pace.

Practise this chapter →

Ten questions from Central Problems & the PPC, at your own pace.

In the graph, the economy moves from B to a point with 45 tonnes of wheat on the PPC.

Question 51

Explanation